"A low productivity level becomes a problem commonly found in developing countries, including Indonesia," deputy for economic affairs at the ministry, Amalia Adininggar Widyasanti, said at the ‘Green Economy Indonesia Summit 2022: The Future Economy of Indonesia’ here on Wednesday.
The economic productivity level in Indonesia, she said, is still low compared to other countries.
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Moreover, the level of research and innovation in the country is also below the global average, she added.
She quoted the Asian Productivity Organization's (APO's) Productivity 2021 Databook, which reported that Indonesia's factory productivity index tended to decline between 2010 and 2019, and ranged from 1 to 0.85, below Malaysia, Vietnam, Thailand, China, and India.
"When we look at the correlation between productivity and GDP per capita, it is positive. It means that the higher the productivity of a country is, the higher the welfare level it has," Widyasanti said.
Indonesia's economic climate has shown a recovery based on the aggregate indicators, but there are still "wounds" on the production side, she added.
To achieve this end, she stressed that the nation's task is to increase potential output so that economic growth is not short-term.
Furthermore, she pointed out, in the 2023 Government Work Plan, the economic growth is targeted at 5.3–5.9 percent. The optimism regarding economic growth is based on the first-quarter growth of 5.01 percent this year.
"This is a recovery momentum that we need to maintain from 2021's fourth quarter," she said.
The government is also targeting to raise the production of the processing industry along with its GDP contribution.
"In 2022 and 2023, we target it to reach 20 percent," she added.